Moody’s downgrades two major French banks

CREDIT ratings agency Moody's has downgraded two major French banks, Credit Agricole and Societe Generale, by one notch, citing fears over their exposure to Greek sovereign debt.

Moody's cut Credit Agricole's rating from Aa1 to Aa2, and Societe General's from Aa2 to Aa3. They said that they were keeping BNP Paribas on negative watch. Despite the downgrade, Agricole's shares rose 3.22 per cent by midday today. Shares in Soc Gen fell 3.27 per cent.

Over the last few weeks, shares in the French banks have dropped as investors tried to identify which countries would be at risk in the event of a Greek default, which is now seen as inevitable. There are also worries over exposure to Italian debt bonds.

The news raised fears that the eurozone debt crisis was spreading to core European economies. Polish finance minister Jacek Rostowski, whose country holds the rotating EU presidency, said, "Europe is in danger", and that "if the eurozone breaks up, the European Union will not be able to survive".

Read a full report at Associated Press. ·